College Scorecard's flawed focus on average net price

Submitted by Abigail Seldin on February 25, 2013 - 3:00am

The Obama administration unveiled its new College Scorecard[1] with much fanfare this month. Highlighted to college-bound students as a way to “get the most bang for your educational buck,”[2] the Scorecard is intended to serve as a consumer guide for higher education. The first section of the Department of Education’s new College Scorecard features the average net price of attendance at the selected institution. To guide users, the scorecard categorizes these average net prices as low, medium or high.

There’s just one problem: no student is average.

Consider a low-income applicant to the University of Pennsylvania, a school with a high sticker price. At Penn, a full-price student pays $59,600 (including tuition, room & board, and other fees) and a low-income student with a full scholarship pays $0. The average net price across these two students is $29,800. (As it happens, Penn’s reported average net price is $20,592.) Just like high sticker prices, high average net price can mislead students from modest circumstances looking for affordable college options. Many colleges – particularly prestigious schools with high sticker prices – are committed to building socioeconomically diverse student bodies. At such schools, students’ individualized net prices can vary significantly depending on their financial circumstances.

Would-be college students can access this kind of information before they decide where to apply to school. The Higher Education Opportunity Act of 2008 (HEOA[3]) required all postsecondary institutions receiving Title IV funding to post net price calculators (NPCs) on their websites by October 2011. Using NPCs, students can identify their likely cost of attending different institutions – a number that often varies widely between students based on their state of residence, academic performance, personal income, assets, the number of family members also attending college and a variety of other factors. An individual student's net price is often different from both the school’s full-fare “sticker price” and the average net price.

The administration seems to be focusing on the College Scorecard, so we hear little about the net price calculators these days. Like the College Scorecard, NPCs offer key financial information to students and families prior to application and matriculation. The College Board’s 2012 study[4] revealed that more than half of college-bound seniors from lower-income and middle-income families still rule out colleges on the basis of sticker price, but with the advent of NPCs, students from all backgrounds can identify affordable college options before they decide where to apply.

This innovation has the potential to turn college advising on its head. Instead of discussing financial aid after students have received acceptance letters in senior spring, counselors can help students build application lists in junior spring that take financial aid into account. With the Scorecard’s average net prices, high schools students are left with yet another one-size-fits-all ranking of affordability; in short, it is not much better than the starting “sticker price.”

To demonstrate the relative importance of individualized net prices, let’s take a look at the projected cost of college for Cristina Moreno, the narrator of the 2004 film “Spanglish[5]” and a first-generation low-income minority college-bound student. Here, we have compared Cristina’s individualized net prices with the average net prices for three schools: University of California at Berkeley, New York University and Hampshire College.

[6]

For low-income students like Cristina, the College Scorecard misses the mark – sometimes by a big margin. As with sticker prices, these average net prices can indicate to low-income students that they will find neither financial support nor a warm welcome at selective schools.

Ultimately, the White House College Scorecard serves two important purposes: it provides policymakers a high-level view of the affordability of a school, and it provides students a more user-friendly portal to access existing summary data. Though the average net price might be helpful to policymakers trying to manage the overall cost of education in America, students making the biggest investment of their lives need easy access to detailed, individualized information. The Center for American Progress – which issued criticism of the draft College Scorecard[7] in 2012 – praised the new version[8] for including a link to each school’s NPC. Even so, parents and students would need to visit each school’s individual NPC – adding time and repetition to an already complicated college search – and then decode the distinctive results pages generated by calculators built by the numerous vendors in the space.

Despite the advantages of using net price calculators to identify affordable schools, the CollegeBoard’s 2012 study[4] revealed that only 35 percent of college-bound high school seniors used NPCs during their college search. Initial efforts to promote NPCs included a video contest and substantial press coverage, but many college access professionals and counselors still aren’t aware of the net price calculators, let alone the federal requirement.

Theoretically, links to all NPCs have been available since 2011 on the Department of Education's College Navigator, but the list posted there is far from accurate; in 2012, our team spent more than 500 hours identifying the correct links for all 7,000+ schools and campuses receiving Title IV funding. A quick check of the College Scorecard’s NPC links revealed the University of West Alabama’s NPC link actually directs users to its homepage, but at least the calculators garnered a spot in the new system.

Regrettably, in drafting the HEOA, Congress missed an opportunity to create a centralized system based on the individualized net price concept. HEOA did not compel schools to adopt a specific net price calculator, and the implementation of the NPC requirement has yielded more than a dozen different calculator types with hundreds of variations. To generate of individualized net price results across all schools in a College Scorecard type system, the federal government would need to compel the adoption of a universal net price calculator format and amend HEOA. Such a requirement would place an additional burden on college financial aid offices, but would certainly benefit students seeking a bigger bang for their buck during the college selection process.

At College Abacus,[10] we are closing the gap between legislation – and its goals – and the actual needs of students, parents, and counselors around the United States. We are taking on the task of aggregating the net price calculators into a single, student-friendly tool. With the help of a grant provided by the Gates Foundation’s College Knowledge Challenge, we expect College Abacus to expand from its current group of 4,000+ schools to include all US colleges and universities by September 2013.

Given the 1 trillion dollar student loan crisis, students need help identifying colleges that they can afford. The College Scorecard may have stimulated conversation on this critical issue, but it is unlikely to serve our most vulnerable students in their pursuit of affordable higher education.

Abigail Seldin is the CEO and co-founder of College Abacus[10],[10] and an ABD DPhil in anthropology at the University of Oxford.